It Can Be Surprisingly Easy To Reduce the Interest Rate on Your Credit Card
When you apply for a new credit card, you are lured by its 0% introductory interest rates. This might be why you decide to go for that particular credit card in the first place! However, when the introductory period expires, which is generally for one year, you have to pay high interest rates, like 15%, 20%, 25%, or even higher.
In such a case, you do not have any choice, but to pay the interest rates, no matter how high they are. You drain your money by paying the high interest rates on your credit card. For instance, a dinner of Rs. 1,000 can cost you Rs. 150, Rs. 200, or even more, if you pay with your credit card and if there is an outstanding balance on your card.
Plus, many people are not able to make their credit card payments every month – and this includes even the minimum payments. This is because of the high interest rates on their credit cards. Moreover, the rates are high, as they pay only the minimum amount on their credit card. In short, it is a vicious cycle.
Fortunately, there are some surprisingly easy ways you can reduce the interest rates on your credit card. If they work, you can finally break free from your credit card debt spiral! There are two ways through which you can lower the interest rate on your credit card.
The first method is to negotiate a lower interest rate. The second method is to transfer your credit card balance to another credit card that has a lower interest rate. Let us have a look at each of the two ways in order to reduce your credit card’s interest rate.
I. Negotiate a lower interest rate
First of all, let me tell you that bargaining for a reduction in the interest rate of your existing credit card is always better as compared to getting a new credit card with a lesser interest rate. After all, you cannot escape from your card balance.
Moreover, whenever you get a new card, an inquiry is placed on your credit history, which in turn lowers your CIBIL score, thus resulting in high interest rates on your credit card. Again, this is a vicious cycle.
Therefore, it is advised to ask for a lower interest rate from your credit card issuer on your current credit card. You can use some of the following negotiating tactics, which can help you and improve your chances of being successful in your lower interest rate negotiation.
- Begin with your oldest credit card first: Credit card companies value loyalty of their customers and if you are a long time customer of one credit card company, you will have more chances of getting a reduction in your credit card’s interest rate.
- Just call them and ask: Simply call on the customer service number, which is there at the backside of your credit card and ask them for a reduction in your card’s interest rate.
- Be persistent: Do not give up, if they refuse to lower your card’s interest rate on the first call. You can call them several times in 2 to 3 months.
- Be polite: Talk politely and pleasantly to the customer service representative of the credit card company.
If this plan does not work out, then you can try the second method.
II. Transfer your credit card balance
The second method is to transfer some of your card debt to another credit card with a lower interest rate or which has a low introductory interest rate. For this, you must first shop around in order to check out the best balance transfer deals among so many.
Since there are many balance transfer deals available, it is better to put in some efforts and find the best one for yourself, as per your requirements. And, remember to check the balance transfer charges as well as the annual fees of different credit cards, when you are looking for the best transfer deals.
So, first use the primary method and if it fails, then you can use the second method to reduce your card’s interest rate. Do not despair and do your full research. Then, you will surely be able to lower the interest rate on your credit card.
Of course the best option is don’t get so far into debt in the first place! – CreditSmart